Friends
Stocks and commodities had a very difficult day today. To add to yesterday’s disappointment from the Fed, today we got news that things could be slowing in China. Stocks went down right from the beginning and began to pick off several support levels. We were focusing on 1140 on the S&P 500 and then 1120 as important support levels, and both were violated. By late in the day, the S&P traded down to 1115 but rallied a little in the last half hour to close at 1129, down 37 points for the day. The Dow Jones Industrial Average finished the day down 391 points, and all of the averages have more than erased last week’s gains.
Oil fell $5 for the day to dip below $80 (our range was $80 to $90) and Gold fell over $70 to close near $1735. Other commodities, including copper were down big also with fears of a global slowdown being the major concern. It really was a day of selling all types of assets and piling into to the dollar and U. S. fixed income (the 10 year note was trading at 1.75%).
With the help of the Fed and Dr. Bernanke, interest rates continue to fall, making it very difficult on savers of all types. Between the flattening yield curve at lower and lower levels, and overwhelming regulation, the banks continue to be under siege.
The good news is that there is so much negativity. CNBC is having a field day rolling out the perma-bears and have their “markets in turmoil” specials. We suspected that the market needed to test the August lows at least one more time before we could get too comfortable that we have put the selloff behind us. Now prices are getting much cheaper and the negativity is getting much higher. This is how bottoms are made. It isn’t pretty, but it does have a way of getting shares out of weak hands and into stronger hands.
We will be looking for opportunities as they arise.
Have a nice evening everyone.
